Orissa High Court
Case Details
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No.2392 of 2025 (In the matter of an application under Articles 226 and 227 of the Constitution of India, 1950). M/s. Pressels Pvt. Ltd. …. -versus- Petitioner(s) M/s. Indian Rare Earths Ltd. …. Opposite Party (s) Advocates appeared in the case through Hybrid Mode: For Petitioner(s) For Opposite Party (s) : : Mr. Surendra Rautray, Adv. M/s. Ipsit Aurobindo Acharya, Adv. Mr. C.K. Rout, Adv. Mr. Jyotirmaya Behera, Adv. CORAM: DR. JUSTICE SANJEEB K. PANIGRAHI DATE OF HEARING:-30.07.2025 DATE OF JUDGMENT:-26.08.2025 Dr. S.K. Panigrahi, J. 1. The present Writ Petition is preferred by the Petitioner challenging the order dated 27.09.2024 passed by the learned Senior Civil Judge (Commercial Court), Berhampur, Ganjam in ARBP No.01 of 2023 rejecting the Petitioner’s application under Section 151 of the C.P.C. wherein prayer was made to recall and set aside the ex-parte order dated 22.11.2023. I. FACTUAL MATRIX OF THE CASE: 2. The present Petitioner is a Small Scale industry having UAN No. OD07B0006265 under DIC, Cuttack. The Opposite Party issued work Page 1 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 order in favour of the Petitioner in 2018 and, accordingly, the Petitioner raised bills during the year 2018-19. Disputes arose between the parties when the Opposite Party allegedly did not pay the amounts so raised by the Petitioner coming to a total of Rs. 40,42,000/- apart from interest thereon. 3. The matter was referred to the MSEFC Council under Section 18 of the MSMED Act. The MSEFC met on 7.7.2022 to adjudicate the claims of the Parties and accordingly, order was reserved and pronounced on 17.11.2022. Vide order dated 17.11.2022 in MSEFC Case No. 23/2020, the MSEFC was pleased to pass the following award: “The Council ordered that the O.P. i.e. M/s IREL (India) Limited, Formerly known as M/s Indian Rare Earths Limited) Through its HEAD-OSCOM, Orissa Sands Complex, Matikhai (PO), Chatrapur (Ganjam), Odisha – 761045 to pay the principal amount of Rs. 40,05,273/- (Rupees Forty Lakhs Five Thousand Two Hundred and Seventy Three) only and interest claim of Rs. 2,08,89,370/- (Two Crores Eight Lakhs Eighty Nine Thousand Three Hundred Seventy) only calculated up to 06.07.2022 as per Section 15 and 16 of MSMED Act, 2006. Further, compound interest with monthly rests shall be payable at the rate of three times of the Bank rate as notified by Reserve Bank of India from time to time till realization of dues. The O.P. is directed to pay the outstanding dues within 30 days.” 4. Aggrieved by the same, the present Petitioner filed an application under Section 34 of the A&C Act praying for setting aside the award dated 17.11.2022 of the MSEFC, Cuttack vide Application bearing ARBP No.8 of 2023 before the Ld. Commercial Court at Cuttack. Subsequently withdrawing the said ARBP No.8 of 2023 before the Ld. Commercial Court at Cuttack, the petitioner filed another application praying for Page 2 of 24
Legal Reasoning
Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 setting aside the award in ARBP No.10 of 2024 before the Ld. Senior Civil Judge-Cum-Commercial Court, Berhampur. 5. Vide order dated 10.10.2023 in ARBP No. 1 of 2023, the Ld. Senior Civil Judge-Cum-Commercial Court, Berhampur was pleased to direct the present Opposite Party to deposit 75% of the awarded amount in line with Section 19 of the MSMED Act. Subsequently, vide order dated 22.11.2023, the Ld. Senior Civil Judge-Cum-Commercial Court, Berhampur was pleased to accept the deposit of cost of Rs. 30,03,955/- and admitted the application u/s 34 of the A&C Act. 6. On 11.7.2024, the present Petitioner moved an application u/s 151 of the CPC seeking recall/setting aside of the order dated 22.11.2023 in ARBP No. 1 of 2023 on the ground that the present Opposite Party deposited 75% of the principal amount only and not 75% of the awarded amount (principal along with interest) which is against the statutory provision of Section 19 of the MSMED Act. 7. Vide order dated 27.9.2024, the present Petitioner’s application u/s 151 of the CPC in ARBP 1 of 2023 was considered and rejected. 8. Thereafter, it appears that the petitioner filed a Memorandum of Appeal on 29.10.2024 under Section 13 of the Commercial Courts Act,2015 challenging the order dated 27.9.2024 before the Ld District Judge, Ganjam at Berhampur. Subsequently, the petitioner pursued its appeal as well as a petition for Stay before the Ld District Judge, Ganjam on 18.11.2024, 20.12.2024, 26.12.2024, 6.1.2025 and 16.1.2025. Thereafter, the petitioner filed the present Writ Petition on 22.1.2025 and has withdrawn the appeal before the Ld. District Court vide order dated
Decision
30.1.2025, by that time this Court had issued notice in the Writ Petition. Page 3 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 9. This Court considers it apposite to not to enter into the factual dispute between the parties and restrain itself only to adjudicate whether the present Writ Petition is maintainable against an order under Section 151 of the CPC, and if so, whether this Court ought to interfere in the matter. 10. Now that the broad facts leading up to the instant Petition have been laid down, this Court shall endeavour to fully summarise the contentions of the Parties and the broad grounds that have been urged to seeking the exercise of this Court’s plenary powers of review. II. PETITIONER’S SUBMISSIONS: 11. It is submitted that the term “amount” under Section 19 of the MSME Act includes both principal and interest. The structure of the Act, particularly Sections 15 to 18, supports this view—where interest is treated as a statutory consequence of delayed payments. Section 17 refers to recovery of the amount due along with interest, and Section 18 carries that forward. Therefore, Section 19 must be interpreted as requiring a 75% deposit of the entire awarded sum, including interest. This ensures the integrity of the MSME framework and prevents debtors from evading a significant part of their liability by depositing principal alone. 12. It was further submitted that the purpose of Section 19 is to discourage frivolous challenges to awards by requiring serious financial commitment. Excluding interest from the deposit would frustrate this purpose, delay payments, and underlined statutory protection granted to MSMEs. Even where courts allowed flexibility in deposit terms, it pertained to payment methods or instalments-not excluding interest Page 4 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 altogether. Therefore, interpreting “amount” to include interest is essential to preserve the object of the MSME Act. III. OPPOSITE PARTY’S SUBMISSIONS: 13. Per contra, it is contended by the learned counsel for the Opposite Party that the term “amount” in Section 19 refers only to the principal sum awarded, not the interest. Sections 16 to 18 of the MSME Act use “amount” and “interest” as separate terms, suggesting that the legislature viewed them distinctly. Since Section 19 refers only to the “amount in terms of the award”, it should logically be interpreted as excluding interest. The present Opposite Party complied with this by depositing 75% of the principal awarded. Requiring deposit of interest in addition would impose a harsh burden, particularly when interest amounts are substantial or disputed. 14. It is further argued that courts must interpret Section 19 reasonably to avoid one-sided hardship. IV. ISSUES FOR CONSIDERATION: 15. Having heard the parties and perused the materials available on record, this Court has identified the following issues that have to be determined which have emerged contentiously during the course of the hearing and is germane to finally decide the lis at hand: a. Whether this Court can entertain a Writ Petition against an order under Section 151 of the CPC? b. Whether the Ld. Sr Civil Judge (Commercial Court), Berhampur has correctly adjudicated the application under Section 151 of the CPC preferred by the present Petitioner? Page 5 of 24 A. WHETHER THIS COURT CAN ENTERTAIN A WRIT PETITION AGAINST AN ORDER UNDER SECTION 151 OF THE CPC? 16. The issue at hand concerns the maintainability of a Writ Petition against Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 an order dismissing an application under Section 151 of the Code of Civil Procedure (CPC). Section 151, in essence, empowers a court to pass orders that may be necessary to prevent the abuse of the process of the court, to do substantial justice, or to ensure that the administration of justice is not thwarted. Unlike specific provisions under the CPC that lay down detailed procedures and remedies, Section 151 is a residual provision. The question that arises is whether a Writ Petition can be filed against an order made under this section when the application is dismissed. This Court must consider whether such orders can be reviewed by higher courts and whether the Writ jurisdiction is the appropriate remedy in such situations. 17. This Court, in examining the maintainability of a Writ Petition against an order passed under Section 151 of the CPC, must first assess the jurisdictional parameters of Writs. It is well established that Writ jurisdiction under Articles 226 and 227 of the Constitution of India is extraordinary in nature and is invoked in cases where a decision made by a lower court or tribunal is patently illegal, without jurisdiction, or causes grave injustice. It is not a remedy for mere errors in law or fact. Therefore, in the present case, the Writ Petition would only be maintainable, if the order dismissing the application under Section 151 of the CPC constitutes a judicial error of such magnitude that it justifies interference by a superior court. Page 6 of 24 18. Section 151 of the CPC is a general, residual provision that grants the Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 court inherent powers to make orders that prevent the abuse of its process or to ensure that justice is rendered effectively. This section is often invoked to fill the gaps where no specific provision of the CPC applies but where a court feels that an order is necessary in the interest of justice. The provision does not provide an appeal or specific review mechanism for an order passed under it. However, it is the court’s duty to act judiciously, and its decisions under Section 151 must align with the broader principles of justice, fairness, and equity. The question arises whether an erroneous or unjust decision made under this section can be subjected to judicial review through a Writ Petition. 19. An order dismissing an application under Section 151 of the CPC is typically not appealable. The CPC lays down specific provisions regarding appealable orders, and an order passed under Section 151 does not usually fall under those categories. Section 96 of the CPC deals with appeals from decrees, and Section 104 governs appeals from certain orders, neither of which explicitly provides for an appeal against an order under Section 151. As such, a party aggrieved by such an order may find themselves without an alternate remedy apart from revision unless the order has caused substantial harm to their rights or the process of law. This leaves open the question of whether Writ jurisdiction can serve as an alternative route for judicial review. 20. Judicial review of subordinate court’s decisions is a well-established principle in Indian law. However, the scope of such review is limited. A Writ Petition is not an appeal, and the Writ Court does not re-examine the merits of the case. Instead, the Writ Court only scrutinizes whether Page 7 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 the court below has acted within its jurisdiction, whether the order passed is in accordance with the law, and whether the decision is consistent with the principles of justice. It is not enough that the petitioner disagrees with the decision; there must be a clear legal or procedural infirmity that justifies the intervention of a superior court. Therefore, in the context of an order under Section 151 of the CPC, the petitioner must show that the order passed was grossly illegal, unfair, or contrary to established legal principles. 21. One of the key purposes of Section 151 of the CPC is to ensure that the court’s process is not abused. This provision acts as a safeguard to prevent the misuse of legal procedures that could hinder the administration of justice. For example, a court may invoke Section 151 to prevent vexatious litigation or frivolous applications that are filed merely to delay proceedings or harass the opposing party. If an application under Section 151 is dismissed, it could indicate that the court has found the application to be without merit, possibly aimed at obstructing the legal process. However, if the dismissal is unjustified and has led to an infringement of a party’s rights or the proper administration of justice, a Writ Petition may be warranted. 22. Writ jurisdiction is primarily concerned with the legality of orders passed by lower courts or tribunals. In this case, the Writ Petition against an order dismissing an application under Section 151 of the CPC must satisfy the threshold of illegality or excess of jurisdiction. This Court, in its supervisory capacity, may intervene if it finds that the court below has acted in a manner that is wholly unjust, illegal, or against public policy. For instance, if the dismissal of the application is based on a Page 8 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 misunderstanding of the law or a failure to consider relevant facts, the Writ Court may find it necessary to step in. However, the court must exercise caution and refrain from interfering unless there is a clear error of law or procedure that warrants such intervention. 23. A Writ Petition challenging an order passed under Section 151 of the Code of Civil Procedure (CPC) is therefore, maintainable, as the inherent powers conferred under this provision are subject to judicial scrutiny, particularly where the order results in a grave miscarriage of justice or reflects procedural impropriety. Section 151 of the CPC is intended to secure the ends of justice and prevent abuse of the process of the court, but it does not operate in isolation from the overarching principles of fairness, equity, and legality. The existence of such inherent power does not exclude the jurisdiction of the High Court under Article 226 or 227 of the Constitution, especially in instances where there is a manifest error. Judicial precedents have consistently affirmed that Writ jurisdiction can be invoked even against orders passed under Section 151 of the CPC when there is a clear case of arbitrariness or when the order substantially affects the rights of the parties. Having considered the maintainability and the scope of this petition within the permissible parameters of writ jurisdiction, this Court is satisfied that the present Writ Petition is maintainable. This Court shall now proceed to consider and decide the matter on its merits in accordance with law. B. WHETHER THE LD. SR. CIVIL JUDGE (COMMERCIAL COURT), BERHAMPUR HAS CORRECTLY ADJUDICATED THE APPLICATION UNDER SECTION 151 OF THE CPC PREFERRED BY THE PRESENT PETITIONER? Page 9 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 24. Learned counsel appearing for the Petitioner award-holder urges that 75% must be calculated on the entirety of the awarded sum and not only on the principal amount. 25. To answer this question, Section 19 of the MSMED Act, which contains the mandate of the 75% deposit, should be set out. “19. Application for setting aside decree, award or order.- No application for setting aside any decree, award or other order made either by the Council itself or by any institution or centre providing alternate dispute resolution services to which a reference is made by the Council, shall be entertained by any court unless the appellant (not being a supplier) has deposited with it seventy-five per cent. of the amount in terms of the decree, award or, as the case may be, the other order in the manner directed by such court. Provided that pending disposal of the application to set aside the decree, award or order, the court shall order that such percentage of the amount deposited shall be paid to the supplier, as it considers reasonable under the circumstances of the case, subject to such conditions as it deems necessary to impose.” 26. The interest component of an award made by the Facilitation Council is governed by Sections 16 and 17 of the MSMED Act which are also relevant for the present adjudication and are accordingly set out below: “16. Date from which and rate at which interest is payable.- Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank. Page 10 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 17. Recovery of amount due.- For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16.” 27. As would be clear from the mandate of Section 19, a Court is statutorily- precluded from entertaining any application for setting aside of an award passed by the Council unless the buyer-applicant has deposited 75% of the amount in terms of the award. Apart from the decisions of the Supreme Court, Section 19 itself constitutes a bar to such an application crossing the threshold unless the appellant - buyer complies with the requirement of the 75% deposit. 28. Section 19 of the MSMED Act, 2006, contains a mandate on a “Buyer” to deposit 75% of the amount of the decree or award or an order or such other percentage as may be directed by a Court, for setting aside any award made by the Facilitation Council. “Buyer” is defined in section 2(d) and the Facilitation Council under section 20 of the Act. There is no scope for any ambiguity in construing the mandate since the words in Section 19 are peremptory in nature and pins a buyer down to the mandate if the buyer chooses to apply for setting aside the award made by the Council. 29. The only exception made in the section is for a supplier; there is no other exit route under the section for a buyer to seek setting aside of an award without the pre-deposit. The framing of the section also makes it clear that the 75% deposit is a condition precedent for a buyer for seeking setting aside of the award of the Council. Page 11 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 30. Section 24 of the MSMED Act seals the mandate of Section 19 by declaring that sections 15-23 shall have overriding effect over any other law for the time being in force. 31. Section 19 read with 24 thus leaves little doubt that a buyer cannot seek setting aside of an award made by the Council unless the buyer first deposits 75% of the awarded amount. 32. Section 19 of MSMED Act categorically uses the word ‘entertain’. The word ‘entertain’ has been explained in Lakshmi Rattan Engg. Works Ltd. v. CST1, which reads as under:— “7. To begin with it must be noticed that the proviso merely requires that the appeal shall not be entertained unless it is accompanied by satisfactory proof of the payment of the amount of tax admitted by the appellant to be due. A question thus arises what is the meaning of the word “entertained” in this context? Does it mean that no appeal shall be received or filed or does it mean that no appeal shall be admitted or heard and disposed of unless satisfactory proof is available? The dictionary meaning of the word “entertain” was brought to our notice by the parties, and both sides agreed that it means either “to deal with or admit to consideration”. We are also of the same opinion. The question, therefore, is at what stage can the appeal be said to be entertained for the purpose of the application of the proviso? Is it “entertained” when it is filed or is it “entertained” when it is admitted and the date is fixed for hearing or is it finally “entertained” when it is heard and disposed of? Numerous cases exist in the law reports in which the word “entertained” or similar cognate expressions have been interpreted by the courts. Some of them from the Allahabad High Court itself have been brought to our notice and we shall deal with them in due course. For the present we must say that if the legislature intended that the word “file” or “receive” was to be used, there was no difficulty in using 1 (1968) 1 SCR 505 Page 12 of 24 Signature Not Verified Digitally Signed Signed by: BHABAGRAHI JHANKAR Reason: Authentication Location: Orissa High Court, Cuttack Date: 31-Aug-2025 15:37:51 those words. In some of the statutes which were brought to our notice such expressions have in fact been used. For example, under Order 41 Rule 1 of the Code of Civil Procedure it is stated that a memorandum shall not be filed or presented unless it is accompanied etc.; in Section 17 of the Small Causes Courts Act, the expression is “at the time of presenting the application”. In section 6 of the Court Fees Act, the words are “file” or “shall be received”. It would appear from this that the legislature was not at a loss for words if it had wanted to express itself in such forceful manner as is now suggested by counsel for the State. It has used the word “entertain” and it must be accepted that it has used it advisedly. This word has come in for examination in some of the cases of the Allahabad High Court and we shall now refer to them.” 33. In view of the above, the filing and entertaining of a petition are two different aspects. Hence, there is no bar in filing a petition under Section 34 of the Act, 1996 and the same can be filed without pre deposit of 75% of the awarded amount. However, the said petition will not be “entertained” without the deposit of 75 % of the awarded amount. 34. The mandate of Section 19 was reinforced by the Hon’ble Supreme Court in Tirupati Steels v. Shubh Industrial Component2 which held Section 19 of the MSMED Act to be mandatory. The Hon’ble Supreme Court further relied on it’s previous judgment in Gujarat State Disaster Management Authority v. Aska Equipments3 to allow the pre-deposit to be made in installments in particular cases of hardship. 35. The above leads to the unerring conclusion that a buyer must first deposit 75% of the awarded amount, as a one-time deposit or in